Govt widens service tax scope to include maintenance and repair jobs

• The two exclusions are services relating to the maintenance of residential buildings and M&R services of joint management corporations (JMCs), such as building maintenance charges.

KUALA LUMPUR (Feb 27): In a surprise move, the government has decided to expand the 6% service tax — which will be raised to 8% come March 1 — to include almost all types of maintenance and repair (M&R) jobs, while it provided exemptions for certain logistics services.

According to a federal government gazette on an amendment to the service tax regulation that was published on the website of the Attorney General’s Chambers last Friday (Feb 23), the service tax would be imposed on M&R services starting from Monday (Feb 26).

This sudden inclusion of M&R services as a taxable service was accompanied by various other previously announced inclusions, namely brokerage, underwriting, karaoke, and logistics services.

But the service tax rate for logistics services — together with the provision of food and beverage (F&B), telecommunications, parking, credit card or charge card services — will stay at 6% when the service tax is raised to 8% by March 1.

The tax will apply to all logistics services except those involving export, import, goods in transit, and F&B by eateries or caterers — including those F&B sold via e-commerce platforms.

Independent tax advisory firm TRATAX Sdn Bhd executive director Thenesh Kannaa said the service tax will be imposed on all M&R services going forward, barring two exclusions.

The two exclusions are services relating to the maintenance of residential buildings and M&R services of joint management corporations (JMCs), such as building maintenance charges.

As the inclusion of M&R services cover a wide range, Thenesh noted that the move will have a “wide impact”.

According to him, the service tax was previously only imposed on M&R services for motor repair and ad hoc maintenance work on assets covered under a maintenance management contract.

"Now, if you call someone to service your air conditioner, that is going to be subject to service tax,” he said as an example of a taxable M&R service.

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